Archive for May 25, 2013

First Dual-Model Health Exchange to Debut in Utah

An effort by Utah — to continue to run its small business health insurance marketplace alongside a yet-to-be-created individual health insurance exchange — has been given the green light by the federal government. According to a report on NPR, Utah Gov. Gary Herbert made the initial request in February, which was followed by months of negotiations. A letter sent to Gov. Herbert May 10 announced the approval of the arrangement. 


“They’ve granted us everything that we asked for, and for that I’m grateful,” Herbert said in a call with the media on May 10, praising Health and Human Services (HHS) Secretary Kathleen Sebelius for her flexibility in the negotiation process. Other states can consider a similar set-up once the HHS officially approves the rule change for Utah.


What sets the system in Utah apart is that the two exchanges will operate independently of one another. This arrangement means, for example, that the state will not provide information about participating residents and businesses for inclusion in federal databases. It is unclear at this point how Utah consumers will be able to compare plans available under each exchange when deciding on coverage.


Until now, states have selected from one of three options in implementing the exchanges, which are being set up in accordance with the Affordable Care Act, which takes effect in January 2014. Seven states have chosen federal/state partnerships, in which the two levels of government work together. State-run health insurance exchanges are being established by 17 states, while 26 states will default to an entirely federally run program for their residents.

What’s the Back-Up Plan for Health Insurance Exchanges?

Yet another problem has appeared that could stymie the Affordable Care Act’s successful implementation: what if we need a back-up plan to evaluate and certify the health plans that are going to be sold on the law’s online insurance marketplaces?


As it stands now, there isn’t an official one. On and off the record, officials at the U.S. Department of Health and Human Services (HHS) assured Governing that there was a secondary plan, but they declined to provide details. Industry sources say they aren’t aware of any such back-up plan—which concerns many of them—but there are a few theories out there.


Here’s the issue: Somebody has to review and certify the health insurance plans that will be sold on the online marketplaces, formerly known as exchanges, created by the federal health reform law. In the 18 state-run exchanges, the state is responsible for doing that review and certification. In the 13 states that are partnering, openly or silently, with the federal government on their exchange, the state is also responsible. In the 19 states fully defaulting to a federal-run exchange, HHS will oversee this process, known as plan management.


That’s how it’s supposed to work. But in practice, it might not be so straightforward. At least five state-run exchanges—Colorado, Idaho, Kentucky, New Mexico and Rhode Island—have yet to start accepting plan applications. If they have serious problems in the next few months–and it is a real possibility that some of them will–they could potentially have to hand plan management over to the feds. Additionally, any of the partnership states, most of which have some degree of state-level opposition to the ACA, could theoretically drop out of that partnership and leave plan management to HHS.


If that happens, nobody is sure how review and certification will be handled. Most states and HHS are allowing several months for the full application and certification process to be completed. With the marketplaces slated to open on Oct. 1, that doesn’t leave a lot of time if things go awry. The federal government is ending its application period for the federal-run exchanges in the next few weeks. If a state doesn’t figure out until a later date that they can’t do plan management and must give that responsibility to the feds, the administration has no obvious mechanism for asking health insurers to submit their plans to HHS instead.


It’s all theoretical right now. But some insurers are worried that it could become a reality very soon.


“That’s a question we’ve been asking ourselves. Nobody’s heard a word,” says one official at a top insurer, who spoke on the condition of anonymity. “At the end of the day, we’re questioning whether HHS is going to be fully ready, and we don’t know what that means if they aren’t.”


What’s the worst-case scenario? If responsibility for plan management is shifted from the state to the feds at the last minute, that could possibly delay the exchange’s opening until after Oct. 1, says Caroline Pearson, who tracks ACA implementation for Avalere Health, an independent consulting firm.


That might not have a huge practical effect for those who enroll—coverage being sold on the exchanges starts Jan. 1, 2014, so there is some lag time—but it would be a significant political blow to the Obama administration, which has steadfastly insisted that the marketplaces would launch on time. It could also complicate public outreach if people don’t know when their state’s exchange is actually opening.


“That could slow down enrollment and slow down marketing. It probably reduces overall enrollment,” Pearson says. “I think we’ve got time before you hit that point, but I’m beginning to get nervous.”


So how does this get resolved? There are a few apparent possibilities, though HHS is staying silent on what their plan is. One rumor, relayed to Governing by a knowledgeable source, is that the feds would ask any insurer planning to sell a plan on any state’s marketplace, including state-run and partnership exchanges, to submit their information to HHS before the federal application period ends in the next few weeks. That way, if the state fails to complete its plan management, the feds already have all the information they need to review and certify the plans themselves.


One insurance industry source said that sounded “plausible,” but hadn’t received any request directly from HHS. Another said they were under the impression that this is a rumor that is floating around the industry, but there were no indications that the feds would actually take that route.


The other possibility involves the two different electronic systems that states and HHS are using to solicit plan information from insurers. The state-run and partnership exchanges are using software called SERFF, which state regulators have used for years to collect information from insurers and review plans. The federal government is using HIOS, which is a separate system but performs essentially the same function.


SERFF and HIOS are capable of transmitting information to one another, one-state level source confirmed to Governing. So, in theory, a state-run or partnership exchange worried about its ability to complete plan management could ask insurers to submit their information to SERFF. Then if the state decides later that it can’t oversee plan management, the information already in the SERFF database could then be moved to HIOS, and HHS could take over.


One insurance industry source said they had heard that this would be HHS’s back-up plan if things go wrong with plan management in some states. HHS declined to confirm that on the record. So until these issues are resolved and open enrollment arrives on Oct. 1, the uncertainty will continue to linger.


Image courtesy of iStockPhoto. This story was originally published by GOVERNING.com

San Francisco Startup Buses Showers to Homeless

San Francisco’s homeless population, estimated at up to 10,000, will soon get some hygiene help from a local entrepreneur. A new startup called Lava Mae will use decommissioned buses donated by the city to provide mobile showers, delousing chambers and toilets to the homeless. Doniece Sandoval, who started the organization, said they will start with a single bus and eventually expand the operation to four buses that will roam the city.


The city received a federal grant to upgrade its buses and the city’s original plan, Sandoval said, was to sell 40 old buses for a nominal fee to make room for the new vehicles. But as a nonprofit organization, Sandoval was told she could have as many buses as she wanted, which will greatly reduce her costs.


“There’s a UN and World Health Organization statement that says that these two things, access to water and sanitation, are basic human rights and it’s sad that here in a city as affluent as San Francisco, there are thousands of people who struggle with access to either,” Sandoval said.


Sandoval had to adjust her original vision as she encountered obstacles. Originally, she planned for each bus to have six showers, six toilets, and on-board water tanks. She discovered, however, that water tanks would have destabilized the vehicles and that there would only be enough room for three showers and two toilets on each vehicle. To get water, the organization got permission from the city to tap into fire hydrants, which will be metered and paid for by the nonprofit. They will put on-demand water heaters on each shower so that warm showers will be available.


The group also needs to figure out how to prevent people from loitering in public when the bus stops in various places. Getting past these types of obstacles has largely been possible thanks to cooperation from Mayor Ed Lee’s office. Without support from the city, most notably Bevan Dufty, Director of HOPE (Housing Opportunity, Partnerships and Engagement) for the City and County of San Francisco, making the project a reality would have been much more difficult, she explained.


Originally, Sandoval planned to refurbish the buses out of state — an expensive proposition. But she found a local design firm that she believes will be able to do the job for a fraction of the cost. Her total costs will be between $150,000 and $200,000 during the years they acquire the buses, and costs should drop after that. The first Lava Mae bus will need supplies, two paid staff members, liability insurance, and fuel to get started.


There are a few benefits of a mobile shower service, according to Sandoval. First, it’s cheaper to operate a bus than it is to build onto an existing brick-and-mortar facility and start paying property taxes. Lava Mae will collaborate with facilities that offer other services, but not showers, to reach their audience.


Secondly, while some homeless people suffer from mental illness, post-traumatic stress disorder or substance abuse issues, there are those who are simply down on their luck, Sandoval said. “There are people for whom a shower might mean the opportunity for a job or apply for housing, where if you show up and you’re dirty, people won’t take you seriously at all,” she said.


Eventually, Sandoval said, Lava Mae could incorporate some form of technology to get the word out to the homeless population about their location. They are considering text messaging to reach homeless people who have cell phones or perhaps some kind of alert bracelet.


Though still in the early planning stages, Sandoval said she has already received interest from people in cities around the country who want her to expand in their areas. “That’s really the long-term vision – to create best practices that we can share,” she said. “It doesn’t have to be Lava Mae necessarily because every community can be slightly different, but I just want to demonstrate that it can be a totally local project that can be easy to execute if somebody puts their hand up and says, ‘Here you go. This is how you do it.’”

Hospitals Charge Medicare ‘Wildly Different Amounts’

With President Barack Obama overhauling the U.S. health insurance system, discussions and debate over medical costs are growing — and newly released data for 3,300 hospitals from the federal Centers for Medicare and Medicaid Services (CMS) shows wide variations in charges from hospitals not only in the same region, but also the same city.


According to a report in The New York Times, a hopital in Saint Augustine, Fla., typically billed nearly $40,000 for minimally invasive gallbladder surgery, while a hospital less than 40 miles away in Orange Park, Fla., charged $91,000. And in Dallas, one hospital’s typical charge for treating simple pneumonia was $14,610, while another charged more than $38,000. 


Though Medicare doesn’t pay the amount a hospital charges — it uses a specific system to reimburse hospitals for treating specific conditions — many say that pricing for a treatment or surgery should be similar, no matter the place of treatment. 


On average, hospitals submitted bills to Medicare that were about three to five times what the agency typically pays to treat a condition, according to a New York Times analysis of the data. And variations between what hospitals charge may be even greater.


Jonathan Blum, the director of the agency’s Center for Medicare, said he couldn’t explain the reasons for that large difference.


But hospitals have reasons, citing that they’re either teaching hospitals or had treated sicker patients. 


And overall, hospitals have come under scrutiny for charges that are largely viewed as difficult to understand — even for experts.


The goal for CMS? “… To make this information more transparent,” Blum told The Times.

36 Hours Behind Rhode Island’s Health Exchange

The Rhode Island health insurance exchange lives behind an unassuming and unmarked door in the basement of the state department of administration building in Providence. That’s where the operation’s brains are: the staff of twentysomething charged with implementing one of the least understood but most important parts of the Affordable Care Act. At its most basic level, the exchange is intended to be an insurance marketplace, a website where people can shop for health coverage and access federal tax subsidies to help them buy it. The staff in Providence want it to be much more than that, but first, they have to get it ready for launch.


Their corner of the basement, lined with makeshift blue cubicles, used to be the building’s gym. Once in a while, a sweat-soaked state worker will shuffle through to the locker rooms along the back wall. There are no windows, just walls; the staff colloquially calls it “the dungeon.” There is nothing glamorous about this job. A recent survey found that nearly 80 percent of Rhode Islanders don’t even know that these people are doing any work at all, much less that they’re sometimes staying to midnight to get that work done by the Oct. 1, 2013 deadline set by the Affordable Care Act when it was signed by President Obama in March 2010. Gov. Lincoln Chafee created the exchange on Sept. 19, 2011, via executive order, and it’s been a race to meet what was always an aggressive timetable.


Moreover, this isn’t like other government programs. Everybody around here, most of whom have spent some time in the private sector, emphasizes how creating the exchange, which centers on launching a complex yet functional and usable website, is more like working at a commercial start-up. This isn’t some entitlement program with automatic eligibility and a strict set of benefits. Dharma Yechuri, a private consultant who came from Blue Cross/Blue Shield in North Carolina, explains that the whole enterprise boils down to getting a segment of state government to think like “a product-centered business.”


Ian Lang, the exchange’s director for marketing and communications, puts it another way: “We’re asking people to change their buying habits. We’re asking them to buy this product.” In many ways, that’s a totally new role for government.


To help do this, Rhode Island has $60 million in federal dollars—think of it as venture capital—and less than five months to finish the job. But they still must deal with the bureaucratic processes and inflexibility built into state government, including cumbersome purchasing and contracting rules. A private website could push back its launch if things weren’t ready when they were supposed to be. The Oct. 1 opening for the exchanges, by contrast, is written into federal statute. “10-1” is the mantra throughout every meeting.


With so little time left, nerves are clearly wearing thin, though the staff tries to put on a brave face because these are people who genuinely believe in what they’re doing. Everyone looks a little frazzled as the data and evaluation team gathers on a May afternoon. No time to spare: it starts at noon sharp and the mismatched fold-up tables that serve as a conference room are littered with plastic tubs and half-eaten salads. As one person tries to remember if they actually sent someone that thing they were going to send them, others are visibly frustrated. Throughout Governing’s 36 hours at the exchange, staff members would vent a little frustration, then hastily add that the previous comment was off the record.


At one point, a data analyst pulled migraine medication out of her purse and popped a dose before handing the bottle to the colleague on her right.


“We have to self-medicate,” she said wryly. She was kidding, of course. Mostly.


That’s the tone as the clock ticks toward the first of October. But despite the general feeling that everybody’s a little on edge, they’re also consistent in their confidence that they’ll be ready. To be frank, they better be. Rhode Island is one of 17 states that volunteered to set up an exchange themselves, rather than let the federal government do it. Some are already speculating that the implementation of the ACA’s final major reforms next year, and its relative smoothness, will be a major factor in the 2014 midterm elections. The exchanges are the big, shiny new object of the group, new entities created specifically by Obamacare with which the general public will interact. It will be the first conscious contact with the law’s reforms for many people, up to 20 million nationwide and more than 850,000 Rhode Islanders.


So the Rhode Island exchange’s staff keeps pushing onward, testing daily whether government can function like a business. Exchange Director Christine Ferguson, a former Commissioner of Public Health in Massachusetts and U.S. Senate staffer, says this is the most challenging thing she’s ever attempted after more than 30 years in government.


“What we’re doing is we’re taking something that people have to buy and we’re trying to ensure that there’s a value proposition for people who need to buy. That is far more like a private sector enterprise than a public sector enterprise,” she says. “I’ve posed this to a number of people, and none of us can come up with anything that government has ever done in any sector where that’s the case. This is different than anything that’s ever been done before.”


The cornerstone of any successful business is a good product. The exchange’s product is an experience, the relatively simple and seamless experience of shopping for and purchasing health insurance. For the customer, it’s supposed to be as easy as entering some basic information (the size of your family, your income, etc.), sifting through the available plans (helpfully labeled by colors such as gold and bronze to signify their level of coverage), and then automatically accessing tax credits to help purchase the one they want.


But for that process to be effortless for the end user, the exchange has to perform a lot of work behind the scenes. That’s where Brian Keane, a principal at Deloitte Consulting, which is building the exchange’s website, and his team take over. They have to launch a website that’s analogous to Expedia or Travelocity—though much more complicated—in the next five months. It has to synthesize information from the four insurers offering a combined 28 plans on the exchange into something that the lay person can understand. It has to send and receive information from a federal data hub that will determine whether people are eligible for help in purchasing their insurance and how much help they’re allowed to receive. Between 2,000 and 5,000 federal rules must be coded into the exchange’s software infrastructure. All of this has to be condensed into an easy web experience that won’t discourage the average Rhode Islander so much that they give up; Keane describes the actual consumer interface as the tip of the exchange’s proverbial iceberg.


Sitting in a Providence hotel room that has become his second home, Keane appears put together. His voice, with a light Irish accent softened by a quarter-century in the States, exudes confidence. He habitually knocks the wooden table to retain good luck. But he admits that an hour earlier, his team of 14 had been squeezed into this tight space, scrambling to get a demo of the website ready for a presentation with state officials later that afternoon. They’re happy with their work, though not happy enough to let Governing observe the presentation.


Deloitte is building exchanges for four other states, and that’s a good thing, Keane says. The company began its work for Rhode Island in January, which would mean they had 10 months to get the website ready for launch. “That would have been insane,” Keane says. But because they’d already done some work for other states, they had a head start here. So despite a lot of speculation in the policy world that the exchanges might not be ready on time, he pledges Rhode Island’s will be.


“We will deliver. The solution will be delivered. We’re testing for problems as we go along,” Keane says. “We won’t let the system turn on if it’s not ready, but even with all the time in the world, there’s always a couple of bugs and things to be addressed.”


But the website is just a part of the overall exchange. The state is also constructing a call center, so those who feel more comfortable buying insurance while talking to someone on the phone will have an alternative. It has to be able to handle more than 64,000 calls per month. Then, like any other good business, the exchange needs a customer service arm to handle the inevitable inquiries of confused or annoyed customers. That will include the call center and an online help section, as well as dozens of independent contractors called ‘navigators’ who will be scattered throughout the state. Lastly, and certainly not least, it requires a big marketing component to make sure those 80 percent of Rhode Islanders who don’t know about the exchange yet will be well aware of it by the time it opens. Like any fresh start-up, the staff conducts thorough market research, surveying the public on details as minute as the exchange’s tagline (“Your health. Your way.” and “We’ve got you covered.” tested well.)


Overhanging everything is the federal Center for Consumer Information and Insurance Oversight, the federal agency tasked with supervising the implementation of the exchanges. They’re the omnipresent overseer, constantly holding calls to offer support and make sure the exchange is following the rules and regulations that CCIIO crafted from the ACA’s provisions. During the data and evaluation meeting, one staff member ticks through the materials that the federal agency wants submitted in the next few days before being stopped by a colleague.


“They never told us that before!” the colleague said.


With every step, the bureaucracy of government adds an extra hurdle to the exchange’s development that some upstart Silicon Valley outfit would never encounter. Lang explains it like this: if he was working at a private company and needed to hire a marketing firm to push its product, he could probably do it within a week. Find a good partner and sign a contract. But to do the same thing for the exchange, he has to go through the state’s purchasing procedure. Put out a request for proposal and leave it open for a set period of time. Collect the offers and post them for public comment. Then clear the contract with the attorney general’s office. The whole process can take a month or more, while the Oct. 1 deadline moves steadily closer.


“Government doesn’t turn on a dime, and it shouldn’t with the public’s money. But there’s a tension there,” Lang says. “Government isn’t usually an incubator for this kind of work. You have to get people to buy into the concept. It’s a leap.”


A lot of reputations ride on the exchange staff overcoming the aggressive timetable and onerous inconveniences that come with being a business within a government construct. That starts with the governor. Chafee issued his executive order because the state legislature wouldn’t agree to a bill to create the exchange. In a sense, he took ownership of its success or failure. Lt. Gov. Elizabeth Roberts has been the chairwoman of the state’s health care reform task force, overseeing all of the ACA implementation, but particularly the exchange. She has a health care background and plans on leaving office when her term expires in 2015. She knows her eight-year tenure will largely be viewed on whether she adequately prepared the state for Obamacare.


“This is what I really have a passion for. Health care is one of those issues that can be a political winner and a political loser,” Roberts says. “We are going to work as hard as possible to leave things moving in the right direction. I want to do as much as I can while I have the chance.”


Then there’s Ferguson. If the exchange is a corporation, then she is its CEO. She plays the role well; during a board meeting, she’s the one with all the answers, the person to whom participants direct their questions. She’s been around government a long time, heading state departments in Massachusetts and Rhode Island as well as serving as a top adviser to Chafee’s father John in the U.S. Senate in the 90’s. She rattles off a list of adjectives to describe her current state of mind—“clear”, “targeted”, “nervous”, “anxious”—before adding a superlative kicker: “Negotiating with Clinton was easier than this.”


She’s been the one responsible with transplanting the commercial start-up mentality into the Rhode Island State House. She’s added a lot of corporate-minded people to do it, people like Yechuri, Keane and Lang, who left a job at his own consulting firm to head the exchange’s outreach effort. The outcome largely rests on her shoulders. Win or lose, Ferguson is the face of the enterprise. She knows it, too: “I don’t sleep a lot,” she says with a laugh.


Despite all the tangible tension, the exchange staff is uniformly expecting a win. They’ve already scored a big one in their minds: the exchange will offer full employee choice for employees of small businesses next year. That means individuals will be able to pick their own plan, rather than relying on their employer. The federal government has already said it’s postponing employee choice until 2015—they’re stuck with one plan selected by their company—so the Rhode Island staff takes great pride in having it ready for the launch. It’s a significant change from the pre-ACA norm, Ferguson says, and it’s important in getting the public to buy into the exchange.


But they’re also preemptively managing expectations. Almost everybody acknowledges that there will be problems on Oct. 1. That recognition has ascended all the way up to U.S. Health and Human Services Secretary Kathleen Sebelius and even President Obama himself. But the goal is to keep those problems to a minimum and as invisible to the public as possible.


Five months from product launch, nobody can say for sure what the exchange’s opening will be like. But its leaders are already thinking ahead. They envision the exchange as more than an insurance marketplace. They have hopes of creating a base for improving Rhode Island’s overall health. They want to allow employers to track how many days their workers miss for preventable reasons. They want to help consumers find health care providers and then rate and review them. They want somebody to be able to come onto the exchange, apply for an insurance tax credit, and find out if they’re eligible for food stamps or other social programs while they’re at it. That’s the grand vision that keeps these people working hard, the motivation that has Lang still juggling his Blackberry and iPhone at his son’s swim lesson, so much so that another parent has to tell him to pay attention.


But first, they have to get to the opening date. In the exchange’s official home, on the first floor of the Rhode Island State House across the street from the dungeon, there’s a white dry-erase board hanging in the corner with “158 Days” written in blue marker. That’s the countdown to Oct. 1. When told it’s a little out of date (there are less than 140 days left), one staff member says: “Some days, we don’t change it. It’s too depressing.”


But they keep going, focused on the mission. The next day, the outdated figure is erased and replaced. “138 days” to go.



This story was originally written and published by Governing magazine. Photo from Shutterstock.

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